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Comment by foogazi | Hacker News Reader

Just experienced what the lack of app based surge pricing does. After exiting a major sporting event I expected the streets to be swarmed by taxis - easy money for them

But there was no incentive, nothing to tell the city’s drivers to show up en-masse. They would just earn the same city base fare

Thousands of people either had to walk or wait in line at the crowded metro station

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I'm guessing the regular people in the city were very happy that they didn't experience sudden shortage of taxis, coupled with an extreme surge in price. Meanwhile, the spectators from the sport event were incentivized to choose the more efficient means of transport.

Looking at it from the systems level, I'm not at all convinced that when a mass event spikes the demand for taxis, having drivers go to that event chasing profit is a good idea. Imagine half the plasma in your body moving to your digestive tract the second you eat something. I think from the city's perspective, it's better to have taxis minimize variance than maximize profit.

> Imagine half the plasma in your body moving to your digestive tract the second you eat something

Actually this is not too far from what really happens soon after you eat a big meal. The blood flow to the stomach-related arteries greatly increases soon after a meal (not sure on actual number for "greatly").

I tend to agree with your main point in any case.

That’s not exactly how it works. The primary function of surge isn’t to redistribute a fixed pool of drivers - it’s to incentivize additional drivers to go online in an area with excess demand. For example, it used to be that surge would spike insanely high on big days like Halloween and New Years Eve because demand was drastically higher than supply. Once drivers saw other people making 8-10x surge, more people started signing on at these peak times and average surge went down.

Yes that was part of my thought too

In response to a pricing surge I expected more drivers to be incentivized to get out of bed at 11PM and make more money

But if that hour of work at 11pm is worth the same as waking up 8 the next day then they lose out on thousands of people willing to pay surge pricing

> In response to a pricing surge I expected more drivers to be incentivized to get out of bed at 11PM and make more money

That's true. But they also may be incentivized by demand surge in itself - when the demand overwhelms supply, they can earn maximum effective hourly rate, which is not the case when the demand is roughly matching the supply.

Adding surge pricing on top of that means wealthy people get prioritized, which is a separate effect and one that can be considered a) unfair, and b) disrupting to the regular city life, especially if the attendees of a mass event that caused the demand spike are wealthier on average than the regular citizens.

Yes, that is a good point - there is a ceiling on price

But when demand spikes in their area they are also hurt because the taxi fleet won’t respond

That's true. But they have a chance of some service, vs. no service at all - so the degradation is more gradual. Meanwhile, if there's a reserve supply of drivers who don't usually bother, at least some of them will join up, because even with a set rate, a demand spike means there's much less delay between orders.

Sounds like a good thing to me. Taxis are not a good solution for major sporting events. The metro is the only infrastructure which can handle that sudden burst of people (in my city they run extra metro trains, each which can transport about 1200 people).

Not every city out there has a subway system or competent people in charge of public transportation.

Formula 1 events draw big enough crowds that they experience helicopter congestion - spend $1000+ per seat for a helicopter taxi service and there's still a queue

I'm sure surge pricing attracts more drivers, but it's no panacea¹ so long as there's finite road capacity at any price - if you want to avoid waiting in line entirely, attending major sporting events is not for you :)

¹ Unless the price surged so high taxi drivers could afford to build extra road capacity - which to me seems unlikely.

What does that have to do with this? Capping Uber's commission to 10% wouldn't prevent surge pricing, it would just mean that at least 90% of the extra fare during surge pricing would have to go to the driver.

That would increase the incentive for drivers because Uber wouldn't be able to take a larger cut during surge pricing.

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